Complex trust restructure unlocks £3.8m commercial refinancing for London landlord

The case involved a four-storey commercial building with three tenants, originally held within a family trust set up by the client's parents. When the trust was annulled, the property had to be transferred into the client's sole name.

A second property within the same trust was allocated to another family member, creating multiple complexities and departures from standard lending policy. Inheritance tax, capital gains tax and other liabilities all required careful consideration during the restructure.

With planning permission already secured, the client wanted to release capital from the commercial asset to fund the build on their own land. Rather than taking on a development finance facility, which would have introduced additional professional layers, fees and administration, InterBay structured an interest-only term loan over 120 months, with funds released in full at the outset. The two completed properties will be held as rentals within the client's portfolio.

"Transferring property out of a trust structure can be highly complex and must meet specific legal and taxation conditions," said Marc Callaghan, head of commercial lending at InterBay. 

"Considerations around Inheritance Tax (IHT), Capital Gains Tax (CGT) and other liabilities all come into play. Our Specialist Finance Account Manager, Simon Ward, worked closely with Mark Jerman at Watts Commercial to identify the most effective route to funding the client's development ambitions."

The broker on the case, Mark Jerman, senior commercial manager at Watts Commercial Finance, explained how the simpler structure ultimately served the client better. 

"The client needed to raise capital to support the build costs for two new residential properties," he said. "While a traditional development facility was an option, it would have introduced additional professional layers, fees and complexity. Instead, we agreed a simpler, more cost-effective solution: securing a term loan against unencumbered assets within the client's portfolio, with full funds released at the outset." 

"InterBay demonstrated exceptional expertise and flexibility throughout, and the collaborative approach between our teams resulted in an excellent outcome for the client."